Joint circular 2341/2000/TTLT/BKHCNMT-BTC

JOINT CIRCULAR No JOINT CIRCULAR No. 2341/2000/TTLT/BKHCNMT-BTC OF NOVEMBER 28, 2000 GUIDING THE IMPLEMENTATION OF THE GOVERNMENT’S DECREE No. 119/1999/ND-CP OF SEPTEMBER 18, 1999 ON A NUMBER OF FINANCIAL POLICIES AND MECHANISMS ENCOURAGING ENTERPRISES TO INVEST IN SCIENTIFIC AND TECHNOLOGICAL ACTIVITIES Pursuant to the Government’s Decree No. 119/1999/ND-CP of September 18, 1999 on a number of financial policies and mechanisms encouraging enterprises to invest in scientific and technological activities (hereafter called Decree No. 119/ND-CP for short); Pursuant to the current legislation on taxation, finance, science and technology; The Ministry of Science, Technology and Environment and the Ministry of Finance hereby jointly guide the implementation of financial policies and mechanisms encouraging enterprises to invest in scientific and technological activities according to the provisions of Decree No. 119/1999/ND-CP, as follows: I. SCOPE OF REGULATION AND SUBJECTS OF APPLICATION 1. Scope of regulation: Scientific and technological activities to be encouraged under the provisions in Article 1 of Decree No. 119/1999/ND-CP and guided in this Circular include: 1.1. Research and development activities carried out by enterprises on their own or under contracts signed with organizations and individuals at home and abroad. Research and development activities include the following processes: Basic research, applied research and experimental development. Boundary between the research - development and the production is determined as follows: The final stage of research and development activities is to create a new technology and/or new products and to conduct small-scale trial production in order to improve such new technology and/or products before putting them into production and life. When the trial production process goes normally, the research and development stage shall conclude. 1.2. Application of scientific and technological achievements, renewal of technologies and manufacture of new products: - Application of research and development activities’ results to the reality; - Application of scientific and technological achievements already acquired through technology transfer; - Substantial improvement of available technologies; - Manufacture of new products or existing products with their properties and quality substantially improved. 1.3. Scientific and technological services: Are activities associated with the research and development activities or contributing to the creation, popularization and application of scientific and technological knowledge. Scientific and technological services include: a/ Services requiring high techniques, such as: Restoration, repair and/or adjustment of machines, equipment, experimental instruments, measuring and control devices, scientific and technical equipment with automatic control device; expertise, testing, quality and standard inspection of materials and products; b/ Data processing, computing and analysis in direct service of research and development; c/ Drawing up pre-feasibility and feasibility study reports and environmental impact assessment reports; d/ Activities related to the protection of industrial property rights and technology transfer, and to the application of new technologies to production, including: - Activities of protecting inventions and utility solutions; - Services in support of technology transfer, application of new techniques to the production (selection of technologies, instructions on installation and trial operation of equipment lines, in order to apply transferred technologies, checking and maintenance of machinery, instructions on transferred technological processes, training and fostering of scientific and technological personnel to raise their professional and managerial skills, thus making them capable of firmly grasping the transferred technologies); e/ Services of information, scientific and technological consultancy, technology management consultancy, business administration consultancy, professional fostering and training for purpose of raising scientific, technological and managerial knowledge. 2. Subjects of application include: 2.1. Enterprises operating under the Domestic Investment Promotion Law (amended), including: a/ Limited liability companies; b/ Joint stock companies; c/ Partnerships; d/ Private enterprises; e/ Cooperatives and unions of cooperatives (collectively referred to as cooperatives); f/ State enterprises; g/ Enterprises of political organizations, socio-political organizations, professional societies, that have business registrations according to the provisions of law; h/ Enterprises established by overseas Vietnamese who make direct investment in Vietnam; i/ Enterprises established by foreigners who permanently reside and make direct investment in Vietnam; j/ Enterprises established jointly by Vietnamese citizens and overseas Vietnamese or foreigners permanently residing in Vietnam. 2.2. Foreign-invested enterprises and foreign parties to business cooperation contracts under the Law on Foreign Investment in Vietnam, including: a/ Enterprises with 100% of foreign investment capital; b/ Joint venture enterprises; c/ Foreign parties to business cooperation contracts under the Law on Foreign Investment in Vietnam. 3. Conditions to enjoy the preferences: The subjects defined at Point 2, Section I of this Circular shall enjoy preferences provided for in Decree No. 119/1999/ND-CP when they fully meet the following conditions: a/ Being enterprises engaged in encouraged scientific and technological activities specified at Point 1, Section I of this Circular; b/ Having already made tax payment registration; c/ Operating with the business lines and trades inscribed in their business registrations; and d/ Observing the prescribed accounting and cost-accounting regime. II. GUIDANCE ON THE ENTERPRISE INCOME TAX PREFERENCES 1. On preferential enterprise income tax rates: 1.1. Enterprises operating under the Domestic Investment Promotion Law (amended) that are engaged in activities of applying high technologies and/or providing scientific and technological services shall be entitled to the preferential enterprise income tax rates specified in Clause 1, Article 3 of Decree No. 119/1999/ND-CP. A dossier of application for preferential tax rates shall comprise: a/ An application for enjoyment of preferential enterprise income tax rates with signature of lawful representative and seal of the enterprise; b/ The establishment decision (if any) and business registration certificate (notarized copy or copy with signature of the director and the seal of the enterprise); c/ The written declaration for tax registration; d/ Comments of the science and technology management body. Documents to be submitted to the science and technology management body for its comment shall include: - For each type of enterprise engaged in high-tech application activities (application of technologies for manufacturing high-tech components or parts or advanced technological lines according to the provisions at Point 3, Section I of Circular No. 2345/TT-BKHCNMT of December 4, 1998 "Guiding the identification and recognition of high-tech industrial enterprises operating under the Law on Foreign Investment in Vietnam"): + For State enterprises: Feasibility study report or investment report, technical design approved by the competent body, and project’s final settlement or minutes on hand-over of project for putting it into operation (if the final settlement is not made yet); + For limited liability companies, joint stock companies and partnerships: Feasibility study report or investment report, technical design approved by the members’ council or the owner, and project’s final settlement or minutes on hand-over of project for putting it into operation (if the final settlement is not made yet); + For private enterprises: Technical design, contract and final settlement of the contract for construction investment and installation of equipment and facilities. In case of self-construction, the concerned enterprise shall have to produce invoices and/or vouchers on the purchase of supplies, machinery and equipment, and enumerate those actually installed and used according to the technical design. + For cooperatives: Feasibility study report or investment report, technical design approved by the Managing Board, and project’s final settlement or minutes on hand-over of project for putting it into operation (if the final settlement is not made yet); - For enterprises providing scientific and technological services, the documents shall include: + The contract for scientific and technological services; + The written final settlement of the contract. 1.2. Foreign-invested enterprises and foreign parties to business cooperation contracts under the Law on Foreign Investment in Vietnam, that have investment projects in fields of application and development of high technologies and/or scientific and technological services, shall enjoy preferential enterprise income tax rates provided for in Clause 2, Article 3 of Decree No. 119/1999/ND-CP. The preferential rates shall be specifically inscribed in investment licenses. For enterprises that had been granted investment licenses before the effective date of Decree No. 119/1999/ND-CP but have not yet had their investment licenses adjusted by the investment licensing bodies shall continue to comply with the provisions of their investment licenses. In cases where their investment licenses do not state the preferential rates but the enterprises wish to enjoy enterprise income tax preferences according to the provisions of Decree No. 119/1999/ND-CP, they shall have to file their dossiers to the tax authorities directly managing them. A dossier of requesting to enjoy the preferential tax rates shall comprise: a/ An application for enjoyment of preferential enterprise income tax rates with signature of lawful representative and seal of the enterprise; b/ The investment license (notarized copy or copy with the enterprise’s signature and seal); c/ The written declaration for tax registration; d/ Comments of the science and technology management body; Documents to be submitted to the science and technology management body for its comment shall include: - For enterprises having projects for high-tech application and development (application of technologies for manufacturing high-tech components or parts or advanced technological lines specified at Point 3, Section I of Circular No. 2345/TT-BKHCNMT of December 4, 1998 "Guiding the identification and recognition of high-tech industrial enterprises operating under the Law on Foreign Investment in Vietnam"): Feasibility study report or investment report, technical design approved by the competent body, project’s final settlement or the minutes on hand-over of the project for putting it into operation (if the final settlement has not been made yet); - For enterprises providing scientific and technological services: The contract for scientific and technological services and the written final settlement of the contract. 2. Enterprise income tax exemption or reduction under the provisions of Article 4 of Decree No. 119/1999/ND-CP: 2.1. Activities exempt from enterprise income tax specified in Clause 1, Article 4 include: - Income earned from the performance of research and development contracts. - Income earned from the performance of contracts for technical services in direct service of agriculture, fishery and forestry, including: + Supply of new plant varieties (before mass production is permitted), domestic animal breeds which have been created at home or imported (before being recognized as technically advanced breeds), supply of breeds for experiment or regionalization purpose; + Plant protection services (for agricultural, forestry, medicinal plants...); + Services of animal disease prevention and combat (veterinary service, services of disease prevention and combat for cattle, poultry or aquacultural products); + Technical instructions and popularization on: Cultivation, intensive crop farming, processes of raising cattle, poultry and aquatic products, preserving and processing agricultural, forest and aquatic products; + Consultancy on survey, planning and inspection of quality of irrigation works in direct service of agriculture; + Mapping activities in service of the planning of agriculture, forestry and aquaculture; + Analysis of agro-chemical and pedological conditions and products’ quality in direct service of those engaged in agricultural, forestry or aquacultural production; + Other agriculture, forestry and fishery promotion activities. - Income earned from capital contribution with the intellectual property rights, technical know-hows and/or technological processes. A dossier of application for enterprise income tax exemption shall comprise: a/ An application for enterprise income tax exemption with the signature of the lawful representative and the seal of the enterprise; b/ The establishment decision (if any) and the business registration certificate (notarized copy or copy with the enterprise’s signature and seal) or the investment license; c/ The written declaration for tax registration; d/ Comments of the science and technology management body; Documents to be submitted to the science and technology management body for its comments shall comprise: The contract, the written final settlement of the research and development contract, the contract for technical services in direct service of agriculture, forestry or fishery, or the written record on capital contribution with intellectual property rights, technical know-hows and/or technological processes, together with titles deeds thereof. 2.2. Additional income tax exemption as provided for in Clause 2, Article 4 Enterprises eligible for preferences specified in Decree No. 119/ND-CP shall not have to pay additional income tax for their extra income brought about by objective advantages of scientific and technological activities, according to the provisions in Clause 1, Article 10 of the Enterprise Income Tax Law. 2.3. Enterprise income tax exemption and reduction as provided for in Clause 3, Article 4 A dossier of application for enterprise income tax exemption or reduction shall comprise: a/ An application for enterprise income tax preference with the signature of the lawful representative and the seal of the enterprise; b/ The establishment decision (if any) and the business registration certificate (notarized copy or copy with the enterprise’s signature and seal); c/ The written declaration for tax registration; d/ Comments of the science and technology management body; Documents to be submitted by each type of enterprises to the science and technology management body for its comments shall comply with the provisions at Point 1.1-d, Section II of this Circular. e/ The financial settlement report and the enterprise income tax settlement report of the business establishment for the year preceding the investment year and the year following the investment year, for which it applies for tax exemption or reduction. The enterprise shall base itself on the tax exemption or reduction level to calculate and separately account its extra income brought about by the new investment, the tax amount to be exempted or reduced and the payable tax amounts for each period as well as for the whole year, then make the tax final settlement with the tax authorities as prescribed. In cases where the enterprise cannot separately account its taxable extra income earned through the investment in scientific and technological services, formation of new production lines, expansion or technological renewal, the taxable extra income shall be determined on the basis of proportion of increased investment value to the total value of the enterprise’s existing fixed assets. Annually, upon making final settlement of enterprise income tax, the tax authorities shall officially determine the enterprise income tax amounts to be exempted or reduced. 2.4. Enterprise income tax exemption or reduction for foreign-invested enterprises and foreign parties to business cooperation contracts under the Law on Foreign Investment in Vietnam according to the provisions in Clause 4, Article 4: A dossier of application for enterprise income tax exemption or reduction shall comprise: a/ An application for entitlement of enterprise income tax preference with the signature of the lawful representative and the seal of the enterprise; b/ The investment license and the business registration certificate, if any (notarized copy or copy with the enterprise’s signature and seal); c/ The written declaration for tax registration; d/ Comments of the science and technology management body; Documents to be submitted to the science and technology management body for its comments shall comprise: Feasibility study report or investment report, technical design approved by the competent body, the project’s final settlement or the minutes on hand-over of the project for putting it into operation (if the final settlement has not yet been made); In cases where the enterprise uses its shared income for reinvestment, the conditions, percentage and calculation formula for reimbursement of the paid income tax shall comply with the guidance in Part II, Section I, Point 6 of the Finance Ministry’s Circular No. 89/1999/TT-BTC of July 16, 1999 guiding taxation matters for investment forms under the Law on Foreign Investment in Vietnam. 2.5. The order and time limit for considering the enterprise income tax exemption or reduction: a/ Within 10 days after receiving complete and valid dossiers asking for its comments, the science and technology management body shall have to give its comments to the concerned enterprises. b/ Within 30 days after receiving complete dossiers of application for enterprise income tax preferences submitted by enterprises, the tax authority directly managing such enterprises shall have to notify the concerned enterprises of the tax preference levels provided for in Decree No. 119/1999/ND-CP. In cases where an enterprise’s dossier is found invalid or such enterprise is not among the right subjects specified in Decree No. 119/1999/ND-CP and guided in Section I of this Circular, the tax authority shall, within 15 days after receiving such a dossier, have to notify the concerned enterprise thereof. III. GUIDANCE ON EXEMPTION OR REDUCTION OF LAND USE LEVY, LAND RENTAL, LAND USE TAX 1. Enterprises operating under the Domestic Investment Promotion Law (amended) that invest in scientific and technological activities specified at Point 1, Section I of this Circular shall enjoy land use preferences for assigned land or leased land for construction of scientific and technological research establishments, laboratories, stations or experiment workshops according to the provisions in Clause 1, Article 5 of Decree No. 119/1999/ND-CP. Land use tax prescribed in Clause 1-c, Article 5 of Decree No. 119/1999/ND-CP includes: Agricultural land use tax prescribed in the Agricultural Land Use Tax Law passed by the National Assembly on July 10, 1993 and the housing and land tax prescribed in the Housing and Land Tax Ordinance promulgated by the State Council (now the National Assembly Standing Committee) on July 31, 1992 and documents guiding the implementation thereof. A dossier of application for exemption or reduction of land use levy, land rental and/or land use tax shall comprise: a/ The written request of the enterprise; b/ The establishment decision (if any) and the business registration certificate (notarized copy or copy with the enterprise’s signature and seal); c/ The written declaration for tax registration; d/ The competent State body’s land assignment decision or the land rent contract; e/ Comments of the science and technology management body; Documents to be submitted by each type of enterprises to the sc